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The War Risk Premium For Oil Prices

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Attacks in around the middle…

Venezuelan Drivers Brace For More Expensive Gas

Gas pump

Prices at the pump in Venezuela will soon catch up with world market ones as the government seeks ways to tackle rampant fuel smuggling that, according to president Nicolas Maduro, is costing the Venezuelan economy billions, the Associated Press reports.

Venezuelan drivers have enjoyed heavily subsidized gas up until now, but now that Maduro has decided to tackle the smuggling problem by making the fuel much costlier, even this little joy will be taken away from them or at least those who don’t have a government-issued ID card. A lot of government opponents refuse to have the ID, the AP notes. Those who show the document at a filling station would still be able to get gas at a price of less than one U.S. cent for a full tank.

What will prevent smugglers from flashing their IDs at the station and get the cheap fuel to sell on in neighboring Colombia or Ecuador remains a mystery.

The gas price news is part of a wider economic overhaul that will also see the new cryptocurrency that Caracas launched in February be used alongside the Bolivar and state oil company PDVSA will use it for all its transactions.

Meanwhile, Venezuela’s crude oil production continues to tank. In July, data from an internal PDVSA report provided to Argus Media suggested that PDVSA had missed its production target, pumping an average of 1.527 million bpd, versus a target of 1.652 million bpd. External sources had estimated the average daily production at 1.34 million barrels.

Related: Global Oil Supply Could Become ‘’Very Challenging’’

However, it may be that both these figures—from the internal report and the analyst forecasts—are actually higher than what PDVSA produced last month. Officials from the Venezuelan company told Argus Media that monthly production figures are regularly inflated.

"They play with the storage tanks and what they report is not reality," one of these officials said while another said the actual daily production in July was just 1.25 million barrels.

By Irina Slav for Oilprice.com

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